Pertamina ‘eyes US shale entry’

01 October 2014, News Wires – Indonesian state outfit Pertamina is in talks to buy a stake in a company that produces shale gas from the prolific Eagle Ford basin in the US, according to a report.

Pertamina is also looking to eventually buy into a liquefied natural gas export project in the US, as it remains in talks to secure further LNG cargoes from North America, Reuters reported.

Didik Sasongko Widi, vice president of LNG at Pertamina, told the news wire that talks are ongoing with an unidentified US unconventionals producer about a stake purchase in the Eagle Ford shale.

Earlier this year it was reported that the Indonesian company was in talks with Talisman Energy to take a stake in the Canadian company’s liquids-rich Duvernay shale of central Alberta.

Didik also told Reuters that the company is in negotiations to secure more LNG cargoes from a US project, after already agreeing such purchase contracts with terminal developer Cheniere Energy.

In the summer Pertamina agreed to buy 760,000 tons per annum from the second train of Cheniere’s Corpus Christi plant in Texas.

The agreement has a term of 20 years with options to extend up to 10 more years beginning on the date of first commercial delivery of the second train, scheduled for 2019.

That was the second agreement with Pertamina following an initial deal to purchase the same volume of LNG, bringing the total quantity of LNG sold to Pertamina under the two agreements to about 1.52 million tpa.

Under the agreement, Pertamina will purchase and load LNG onto its own tankers on a free-on-board basis for a price indexed to the monthly Henry Hub price plus an undisclosed fixed component.

Looking ahead, Didik told Reuters that the end game would be to secure an ownership position in a US LNG export facility, as Indonesia aims for LNG imports of between 3 million and 3.5 million tpa by 2020.

“The first step is to secure the LNG supply. Then we need to mitigate the price risk by going upstream. And then, to connect the whole value chain, we need to go into liquefaction,” Didik told the news wire.